US wholesale retailer Costco has booked a fall in half-year profits as weak economic conditions and the strengthening of the US dollar weighed on earnings.
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The company yesterday (4 March) posted first-half net income of US$502.2m for the six months to 15 February, down from $589.8m a year earlier.
The slump in profits came despite sales inching up 1% during the first half of Costco’s fiscal year to $32.52bn.
However, Costco’s net sales declined during the second quarter, dipping 1% to $16.49bn. Moreover, net income for the three months to 15 February reached $239.7m compared to $327.9m a year earlier.
CFO Richard Galanti said Costco’s decision yo lower prices to boost markjet share and the “continued weaknesss” in non-food sales hit the company during the second quarter.
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By GlobalData“In addition, results were hurt by lower year-over-year gasoline profits and lower reported international profits, the latter a result of the significant strengthening of the US dollar when compared to the currencies of Canada, the United Kingdom, Korea and Mexico,” Galanti said.
On a comparable-store basis, Costco’s sales fell 3% during the company’s second quarter , pushing half-year sales down 1%.
The results, however, were skewed by the strength of the US dollar. Stripping out the impact of foreign exchange, Costco’s second-quarter comparable-store sales rose 5%. First-half sales were up 4%.
